VW: We Will Make 180,000 Touran Minivans In 2003

WOLFSBURG, Germany, Jan 13, 2003; Nick Tattersall writing for Reuters reported that Germany's Volkswagen AG on Monday unveiled the car it hopes will help take its sales back over the five million mark this year, and said the new model would already beat its return on capital target in 2003.

Speaking at the launch of the new Touran, a minivan based on the best-selling Golf, Chief Executive Bernd Pischetsrieder told reporters Volkswagen aimed to produce 180,000 of the cars in 2003 and sell 130,000.

Europe's biggest carmaker is depending on the Touran, which is around the length of a Golf estate but can be fitted with up to seven seats, to boost its sales at a time when its top-selling Golf and Passat models are beginning to look long in the tooth alongside fresher-faced rivals.

The car is also a litmus test for a new employment programme known as "5000 x 5000", under which the firm trains unemployed, unskilled workers and uses flexible working hours to meet capacity requirements.

"If this model stands the test, the entire VW group will learn a lot and will see significant efficiency gains," Pischetsrieder said, adding that, if successful, the employment model could be used to build other VW cars.

The company sold 4.98 million vehicles last year, around 100,000 fewer than in 2001, and some analysts have criticised it for investing too heavily in luxury models instead of focusing on its traditional forte -- cars for the mass market.

UNSEXY AND LATE TO THE PARTY

"People talk about the Touran as a niche car. But it could develop into a bread-and-butter model for the group," said WestLB Panmure analyst Arndt Ellinghorst, who expects the new model to make a two-billion-euro contribution to group revenues this year and boost operating profit by 84 million.

"It is not a very sexy or appealing car, but for a mass manufacturer like Volkswagen it is something that is desperately needed," Ellinghorst added.

Volkswagen's Wolfsburg plant has a production capacity of 200,000 Touran vehicles a year, but the car is a late arrival in the high-growth minivan segment.

French rival Renault will soon launch its second-generation Megane Scenic, the pioneer of the minivan segment when it was launched six years ago, while domestic competitor Opel has been selling its Zafira minivan for almost four years and that is now the market leader in VW's home market of Germany.

Pischetsrieder, who said he expected the Touran to exceed the firm's target of a return on capital (ROC) of eight percent in its first year of production, has repeatedly pointed out that VW was also late in launching the larger Sharan multi-purpose vehicle, a car that went on to become a market leader.

Many analysts had expected the Touran to appear in showrooms last October, but the ramp-up was delayed as new staff needed more training. The car will now go on sale in Germany on March 14.

VW LAW

Pischetsrieder said he had no idea when a decision would be reached by the European Union about a law which limits voting rights in VW to 20 percent and effectively gives the state of Lower Saxony where the firm is based a blocking majority.

Germany's justice ministry said last week the government would meet the European Union's top financial regulator soon to discuss concerns about the law, adding that it was examining the position of EU Internal Market Commissioner Frits Bolkestein.

"It is purely a political question. I do not know what Mr Bolkestein will eventually propose because he has changed his opinion over the past two years already three or four times," Pischetsrieder said.

Analysts say the law effectively prevents a takeover of the firm and its abolition would change investors' perceptions of the company and have a positive impact on its share price.

Pischetsrieder does not agree.

"The only thing I know is that the perception that the VW law prevents a hostile takeover is simply wrong. If someone wants to make a hostile bid, they can do so, even with the Volkswagen law in place," he said.